(AP) Oil prices hit an all-time high above $115 a barrel Thursday amid concerns about sagging U.S. gasoline supplies ahead of the peak demand of the Northern Hemisphere summer.
The U.S. Energy Department said Wednesday that inventories of gasoline fell 5.5 million barrels last week, a much bigger decline than forecast by analysts surveyed by Dow Jones Newswires.
Crude inventories fell 2.3 million barrels last week, the department's Energy Information Administration also reported, while analysts expected a gain.
"The market has focused on the substantial draw in gasoline in the U.S. and also the large crude oil draw," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "The report has provided a knee-jerk reaction for the market and has driven oil to a new high."
Light, sweet crude for May delivery rose as high as $115.45 a barrel in electronic trading on the New York Mercantile Exchange. It eased back to $114.94 a barrel, late afternoon in Singapore.
That is 1 cent higher than the overnight settlement record of $114.93 a barrel. During Wednesday's floor session, oil futures made their first move past the $115 mark.
The surge in oil prices reflected concerns about how much gasoline will be available during America's driving season.
But analysts said the U.S. inventory report also showed that the country's appetite for increasingly expensive gas is declining, noting that gasoline inventories remained at healthy levels despite the drop.
"Gasoline and crude inventories dropped primarily because refiners are not really ordering crude oil and they are also holding back on operating rates because demand is weak," Shum said. "The concerns about gasoline supply in the summer may be overdone."
The market is driven by investors piling money into oil because of the weakening U.S. dollar.
Victor Shum, Energy analystThe EIA report also said inventories of distillates, which include heating oil and diesel, unexpectedly rose last week by about 100,000 barrels. Analysts had expected a sharp decline.
Oil prices were also boosted by the falling dollar, which declined to a new low against the euro on Wednesday. Many investors buy commodities such as oil as a hedge against inflation and a falling greenback. A weaker dollar also makes oil cheaper to investors overseas.
"The market is driven by investors piling money into oil because of the weakening U.S. dollar. Until the dollar really stabilizes, financial investors will continue to prop up oil prices," Shum said.
In other Nymex trading, gasoline futures rose 1.8 cents to $2.957 a gallon while heating oil futures gained 1.36 cents to $3.2966 a gallon. Natural gas prices fell 0.5 cent to $10.428 per 1,000 cubic feet.
Brent crude futures rose 29 cents to $112.95 a barrel on the ICE Futures exchange in London.